A highly-skilled workforce, high level of innovation and strong participation of women makes Sweden Europe’s most competitive economy. Full list: country-by-country.

Sweden remained the most competitive economy in the European Union, followed by Finland and Denmark, Geneva-based World Economic Forum said Sunday.

The study is based on indicators such as economic and productivity growth, research and development spending, and unemployment.

“The Nordic countries are the strongest European performers in the area of innovation, attributable to their companies’ aggressiveness in adopting new technologies and their level of spending on research and development, and the high degree of collaboration between universities and the private sector in research”, the organization points out in its Lisbon Review 2010.

“Indeed, in terms of innovation ‘output’, they register among the highest rates of patenting per capita internationally”.

The Nordic countries have also achieved a high level of social inclusion, with strong participation of women in the workforce. These countries also have developed highly-skilled workforces through top-notch educational systems and strong on-the-job training programmes.

Italy ranked as the third-least competitive nation, just above Romania and Bulgaria at the bottom of the list. Greece was fifth from last.

The EU as a whole had failed to measure up to its goal of becoming the most competitive economy in the world.

“While some progress has been made, much remains to be achieved in order to fully harness Europe’s economic potential,” Klaus Schwab, the WEF’s founder and chairman, said in a statement. “Accelerating the reform process” across the EU “will be critical for ensuring that the region gets back to growth,” he said.

Earlier this year an American think-tank said that Sweden climbed in its yearly economic freedom ranking due to an economy open to global trade and investments.

Sweden was also ranked third most trade-friendly nation on the back of efficient logistics, moving goods and connecting manufacturers and consumers with international markets, the World Bank logistics survey said in January.

Sweden is also among the most transparent and non-corrupt nations in the world, graft watchdog Transparency International said, placing the Nordic country at third place in its annual Corruption Perceptions Index.